Fii Pie Leeway Lifts State Bank

Sustained buying by foreign institutional investors (FIIs) resulted in a jump in the share price of the State Bank of India (SBI) on the Bombay Stock Exchange today.

According to dealers, FII holding in the company has reached the 20 per cent limit permitted by the Reserve bank of India (RBI) with a block deal of around one lakh shares.

The stock closed 2 per cent higher at Rs 244.45 after reaching an intra-day high of Rs 250.75. The trading volume was at 20.20 lakh shares.

According to market buzz, RBI had recently granted permission to FIIs to buy the balance 2 per cent after the stock reached its cut-off limit of 18 per cent.

"After the RBI permission, FII holding has almost reached the 20 per cent upper limit with today's block deal," a dealer said.

SBI had gained 16 per cent to Rs 239.65 on February 12 from Rs 206.80 on January 24. Volumes had reached a high of 37.33 lakh shares on February 7 and a low of 1.64 lakh shares on January 25.

Analysts say the rise in the share price is purely due to speculative buying following hopes of disinvestment in the company after last week's disinvestment in IBP and VSNL.

They say another reason for the increase is on expectations that a rise in foreign direct investment limits and also an expected relaxation in restrictions on the shareholding pattern of SBI in the forthcoming Budget.